McD's may cut franchisees: report

Oak Brook-based McDonald's Corp. is expected to cut the number of its franchisees in coming months, Dow Jones Newswires reported on Wednesday.

Last week McDonald's said it expects third-quarter earnings to exceed Wall Street estimates, but to be relatively flat for the year 2001.

The company said it expects earnings per share for the third quarter to be 41 cents to 42 cents per share, or 43 cents to 44 cents in constant currency terms, compared with 41 cents in the third quarter of 2000. The consensus of analysts polled by Thomson Financial/First Call had looked for third-quarter earnings of 40 cents per share and $1.39 for fiscal 2001 (ChicagoBusiness.com, Sept. 19).

McDonalds has previously said it plans to improve customer experience, cut corporate overhead and eliminate financially weak franchisees in the U.S. while strengthening the fast-food giant's bottom line.

Franchisees and Wall Street sources said company officials have outlined the proposed downsizing in recent days, according to Dow.

The size of the anticipated reduction is uncertain, but some sources say as many as a fourth of the company's U.S. franchisees might be vulnerable. If so, that could affect several hundred of McDonald's estimated 2,500 independent domestic owner/operators, Dow reported.

A McDonald's spokesman on Wednesday strongly denied that hundreds of franchisees may be asked or forced to leave its system, according to Dow.